SOURCE: Adaptec

January 30, 2007 16:05 ET

Adaptec Reports Results for the Third Quarter of Fiscal 2007

Q3 Net Revenue: $60.7 Million, Earnings per Share From Continuing Operations $0.04 GAAP and ($0.04) Non-GAAP

MILPITAS, CA -- (MARKET WIRE) -- January 30, 2007 -- Adaptec, Inc. (NASDAQ: ADPT), a global leader in storage solutions, today reported financial results for the third quarter of its fiscal year 2007, which ended on December 31, 2006.

Net revenue for the Company's third quarter of fiscal 2007 was $60.7 million, compared with $86.6 million for the third quarter of fiscal 2006. Income from continuing operations, computed on a generally accepted accounting principles (GAAP) basis, for the third quarter of fiscal 2007 was $5.1 million or $0.04 per share, compared with a loss from continuing operations of ($6.1) million or ($0.05) per share for the third quarter of fiscal 2006.

GAAP net income for the third quarter of fiscal 2007 was $6.4 million or $0.05 per share, compared with a net loss of ($3.3) million or ($0.03) per share for the third quarter of fiscal 2006.

Non-GAAP loss from continuing operations for the third quarter of fiscal 2007 was ($5.1) million or ($0.04) per share, compared with a non-GAAP income from continuing operations of $1.4 million or $0.01 per share for the third quarter of fiscal 2006. The difference in GAAP vs. non-GAAP this quarter is primarily attributed to a one-time tax benefit of $12.9 million as a result of settling disputes with U.S. taxing authorities for the years of 2002 and 2003.

"The majority of our shortfall this quarter has to do with a significant decrease in actual revenue versus forecasts from our largest original equipment manufacturer (OEM) customer, IBM," said S. "Sundi" Sundaresh, president and CEO of Adaptec. "We are certainly very disappointed with this shortfall and clearly not satisfied with our current financial model. While current business trends are challenging, we continue to remain focused on aggressively implementing our future growth strategy which includes acquisitions that align with our strategy and also help to provide critical mass in terms of products and revenue to Adaptec."

A complete reconciliation between GAAP and non-GAAP information referred to in this release is provided in the attached tables. The Snap Server systems business, which had previously been classified as a discontinued operation, has been re-classified as part of Adaptec's continuing operations and is reflected as such in these results. For purposes of comparison, results from prior periods also reflect this reclassification.

Conference Call

The Adaptec third quarter fiscal 2007 earnings conference call is scheduled for 1:45 p.m. Pacific Time on January 30, 2007. Individuals may participate via webcast by visiting www.adaptec.com/investor 15 minutes prior to the call. A telephone replay of the teleconference will be available through February 14, 2007 by calling (888) 203-1112 in the U.S. or (719) 457-0820 internationally and referencing reservation number 1859496.

About Adaptec

Adaptec, Inc. (NASDAQ: ADPT) provides trusted storage solutions that reliably move, manage, and protect critical data and digital content. Adaptec's software and hardware-based solutions are delivered through leading Original Equipment Manufacturers (OEMs) and channel partners to provide storage connectivity, data protection, and networked storage to enterprises, government organizations, medium and small businesses worldwide. More information is available at www.adaptec.com.

Safe Harbor Statement

This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. Forward-looking statements are statements regarding future events or the future performance of Adaptec, and include the Company's expected revenue and operating results for the third quarter of fiscal 2007. These forward-looking statements are based on current expectations, forecasts and assumptions and involve a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements. These risks include: identifying and completing transactions with attractive acquisition targets and challenges inherent in integrating acquired businesses; achieving necessary support from the contract manufacturers to whom we have outsourced manufacturing, assembly and packaging of our products; retaining key management; Adaptec's ability to launch new software products; difficulty in forecasting the volume and timing of customer orders; reduced demand in the server, network storage and desktop computer markets; our target markets' failure to accept, or delay in accepting, network storage and other advanced storage solutions, including our SAS, SATA and iSCSI lines of products; decline in consumer acceptance of our current products; the timing and volume of orders by OEM customers for storage products; our ability to control and manage costs associated with the delivery of new products; and the adverse effects of the intense competition we face in our business. For a more complete discussion of risks related to our business, reference is made to the section titled "Risk Factors" included in our Quarterly Report on Form 10-Q for the Fiscal Quarter ended September 30, 2006, on file with the Securities and Exchange Commission. Adaptec assumes no obligation to update any forward looking information that is included in this release.

Adaptec is a registered trademark in the United States and other countries. Other product and company names are trademarks or registered trademarks of their respective owners.



                      Adaptec, Inc.
   GAAP Condensed Consolidated Statements of Operations and
    Reconciliation of GAAP to Non-GAAP Operating Results (*)
                       (unaudited)

                                        Three-Month Period Ended
                                    ----------------------------------
                                            December 31, 2006
                                    -----------------------------------
                                       GAAP     Adjustments    Non-GAAP
                                     ---------  ----------     ---------
                                   (in thousands, except per share amounts)

Net revenues                         $  60,650  $       --     $  60,650
Cost of revenues                        45,807        (147)(a)    45,660
                                     ---------  ----------     ---------
Gross profit                            14,843         147        14,990
                                     ---------  ----------     ---------
Operating expenses:
   Research and development             12,931        (986)(a)    11,945
   Selling, marketing and
    administrative                      15,346      (1,107)(a)    14,239
   Amortization of acquisition-
    related intangible assets            1,470      (1,470)(b)        --
   Restructuring charges                  (385)        385 (d)        --
   Other charges                            --          --            --
                                     ---------  ----------     ---------
      Total operating expenses          29,362      (3,178)       26,184
                                     ---------  ----------     ---------
Loss from continuing operations        (14,519)      3,325       (11,194)
Interest and other income                6,600          --         6,600
Interest expense                          (790)         --          (790)
                                     ---------  ----------     ---------
Income (loss) from continuing
 operations before income taxes         (8,709)      3,325        (5,384)
Provision for (benefit from)
 income taxes                          (13,786)     13,503 (f)      (283)
                                     ---------  ----------     ---------
Income (loss) from continuing
 operations                              5,077     (10,178)       (5,101)
                                     ---------  ----------     ---------
Discontinued operations:
   Loss from discontinued
    operations, net of taxes                --          --            --
   Income from disposal of
    discontinued operations,
    net of taxes                         1,301      (1,301)(h)        --
                                     ---------  ----------     ---------
Income (loss) from discontinued
 operations                              1,301      (1,301)           --
                                     ---------  ----------     ---------
Net income (loss)                    $   6,378  $  (11,479)    $  (5,101)
                                     =========  ==========     =========

Income (loss) per common share:
    Basic
        Continuing operations        $    0.04                 $   (0.04)
        Discontinued operations      $    0.01                 $      --
        Net income (loss)            $    0.05                 $   (0.04)
    Diluted
        Continuing operations        $    0.04                 $   (0.04)
        Discontinued operations      $    0.01                 $      --
        Net income (loss)            $    0.05                 $   (0.04)

Shares used in computing
   income (loss) per share:
    Basic                              116,959          --       116,959
    Diluted                            137,330     (20,371)(i)   116,959


                                         Three-Month Period Ended
                                    ----------------------------------
                                            December 31, 2005
                                    -----------------------------------
                                       GAAP     Adjustments    Non-GAAP
                                     ---------  ----------     ---------
                                   (in thousands, except per share amounts)



Net revenues                         $  86,647  $       --     $  86,647
Cost of revenues                        56,477         (21)(a)    56,456
                                     ---------  ----------     ---------
Gross profit                            30,170          21        30,191
                                     ---------  ----------     ---------
Operating expenses:
   Research and development             15,990         (36)(a)    15,954
   Selling, marketing and
    administrative                      18,057        (886)(a)    17,171
   Amortization of acquisition-
    related intangible assets            1,689      (1,689)(c)        --
   Restructuring charges                 2,587      (2,587)(d)        --
   Other charges                         1,472      (1,472)(e)        --
                                     ---------  ----------     ---------
      Total operating expenses          39,795      (6,670)       33,125

Loss from continuing operations         (9,625)      6,691        (2,934)
Interest and other income                4,479          --         4,479
Interest expense                          (758)         --          (758)
                                     ---------  ----------     ---------
Income (loss) from continuing
 operations before income taxes         (5,904)      6,691           787
Provision for (benefit from)
 income taxes                              194        (828)(g)      (634)
                                     ---------  ----------     ---------
Income (loss) from continuing
 operations                             (6,098)      7,519         1,421
                                     ---------  ----------     ---------
Discontinued operations:
   Loss from discontinued
    operations, net of taxes              (665)        508 (h)      (157)
   Income from disposal of
    discontinued operations,
    net of taxes                         3,502      (3,502)(h)        --
                                     ---------  ----------     ---------
Income (loss) from discontinued
 operations                              2,837      (2,994)         (157)
                                     ---------  ----------     ---------
Net income (loss)                    $  (3,261) $    4,525     $   1,264
                                     =========  ==========     =========

Income (loss) per common share:
    Basic
        Continuing operations        $   (0.05)                $    0.01
        Discontinued operations      $    0.02                 $   (0.00)
        Net income (loss)            $   (0.03)                $    0.01
    Diluted
        Continuing operations        $   (0.05)                $    0.01
        Discontinued operations      $    0.02                 $   (0.00)
        Net income (loss)            $   (0.03)                $    0.01

Shares used in computing
   income (loss) per share:
    Basic                              113,531          --       113,531
    Diluted                            113,531       1,906 (j)   115,437
The amounts for all periods presented reflect the reclassification of our Snap Server systems business from discontinued operations to continuing operations.


                              Adaptec, Inc.
         GAAP Condensed Consolidated Statements of Operations and
         Reconciliation of GAAP to Non-GAAP Operating Results (*)
                               (unaudited)



                                         Nine-Month Period Ended
                                   -----------------------------------
                                            December 31, 2006
                                   -----------------------------------
                                     GAAP     Adjustments     Non-GAAP
                                   ---------  ----------     ---------
                                (in thousands, except per share amounts)

Net revenues                       $ 203,274  $       --     $ 203,274
Cost of revenues                     139,618        (521)(a)   139,097
                                   ---------  ----------     ---------
Gross profit                          63,656         521        64,177
                                   ---------  ----------     ---------
Operating expenses:
   Research and development           43,785      (3,546)(a)    40,239
   Selling, marketing and
    administrative                    46,433      (3,538)(a)    42,895
   Amortization of acquisition-
    related intangible assets          4,526      (4,526)(b)        --
   Restructuring charges               3,711      (3,711)(d)        --
   Goodwill impairment                    --          --            --
   Other charges                      13,942     (13,942)(m)        --
                                   ---------  ----------     ---------
      Total operating expenses       112,397     (29,263)       83,134
                                   ---------  ----------     ---------
Loss from continuing operations      (48,741)     29,784       (18,957)
Interest and other income             18,328          --        18,328
Interest expense                      (2,549)         --        (2,549)
                                   ---------  ----------     ---------
Loss from continuing operations
 before income taxes                 (32,962)     29,784        (3,178)
Provision for (benefit from)
 income taxes                        (61,972)     62,014 (f)        42
                                   ---------  ----------     ---------
Income (loss) from continuing
 operations                           29,010     (32,230)       (3,220)
                                   ---------  ----------     ---------
Discontinued operations:
   Income (loss) from discontinued
    operations, net of taxes             132          18 (h)       150
   Income (loss) from disposal of
    discontinued operations,
    net of taxes                       5,031      (5,031)(h)        --
                                   ---------  ----------     ---------
Income (loss) from discontinued
 operations                            5,163      (5,013)          150
                                   ---------  ----------     ---------
Net income (loss)                 $  34,173  $  (37,243)    $  (3,070)
                                   =========  ==========     =========

Income (loss) per common share:
    Basic
        Continuing operations     $    0.25                 $   (0.03)
        Discontinued operations   $    0.04                 $    0.00
        Net income (loss)         $    0.29                 $   (0.03)
    Diluted
        Continuing operations     $    0.23                 $   (0.03)
        Discontinued operations   $    0.04                 $    0.00
        Net income (loss)         $    0.27                 $   (0.03)

Shares used in computing income
 (loss) per share:
    Basic                           116,298          --       116,298
    Diluted                         136,437     (20,139)(i)   116,298



                                         Nine-Month Period Ended
                                   -----------------------------------
                                            December 31, 2005
                                   -----------------------------------
                                     GAAP     Adjustments     Non-GAAP
                                   ---------  ----------     ---------
                                 (in thousands, except per share amounts)

Net revenues                       $ 263,048  $       --     $ 263,048
Cost of revenues                     178,661        (217)(a)   178,444
                                   ---------  ----------     ---------
Gross profit                          84,387         217        84,604
                                   ---------  ----------     ---------
Operating expenses:
   Research and development           52,226        (502)(a)    51,724
   Selling, marketing and
    administrative                    55,757      (3,741)(a)    52,016
   Amortization of acquisition-
    related intangible assets          7,545      (7,545)(k)        --
   Restructuring charges               3,105      (3,105)(d)        --
   Goodwill impairment                90,602     (90,602)(l)        --
   Other charges                       1,472      (1,472)(e)        --
                                   ---------  ----------     ---------
      Total operating expenses       210,707    (106,967)      103,740
                                   ---------  ----------     ---------
Loss from continuing operations     (126,320)    107,184       (19,136)
Interest and other income             12,610         101 (n)    12,711
Interest expense                      (2,598)         --        (2,598)
                                   ---------  ----------     ---------
Loss from continuing operations
 before income taxes                (116,308)    107,285        (9,023)
Provision for (benefit from) income
 taxes                                 3,712         361 (g)     4,073
                                   ---------  ----------     ---------
Income (loss) from continuing
 operations                         (120,020)    106,924       (13,096)
                                   ---------  ----------     ---------
Discontinued operations:
   Income (loss) from discontinued
    operations, net of taxes         (21,546)     20,083 (h)    (1,463)
   Income (loss) from disposal of
    discontinued operations,
    net of taxes                      (3,474)      3,474 (h)        --
                                   ---------  ----------     ---------
Income (loss) from discontinued
 operations                          (25,020)     23,557        (1,463)
                                   ---------  ----------     ---------
Net income (loss)                  $(145,040) $  130,481     $ (14,559)
                                   =========  ==========     =========

Income (loss) per common share:
    Basic
        Continuing operations      $   (1.06)                $   (0.12)
        Discontinued operations    $   (0.22)                $   (0.01)
        Net income (loss)          $   (1.28)                $   (0.13)
    Diluted
        Continuing operations      $   (1.06)                $   (0.12)
        Discontinued operations    $   (0.22)                $   (0.01)
        Net income (loss)          $   (1.28)                $   (0.13)

Shares used in computing income
 (loss) per share:
    Basic                            112,980          --       112,980
    Diluted                          112,980          --       112,980
The amounts for all periods presented reflect the reclassification of our Snap Server systems business from discontinued operations to continuing operations.


(*) To supplement our consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP), we use non-GAAP measures of operating results, net income/(loss) and earnings per share, which are adjusted from results based on GAAP to exclude certain expenses, gains and losses. These non-GAAP measures are provided to enhance the user's overall understanding of our current financial performance and our prospects for the future. Specifically, we believe the non-GAAP results provide useful information to both management and investors by excluding certain expenses, gains and losses that we believe are not indicative of our core operating results. In addition, since we have historically reported non-GAAP results to the investment community, we believe the inclusion of non-GAAP numbers provides consistency in our financial reporting. Further, these non-GAAP results are one of the primary indicators management uses for assessing our performance, allocating resources and planning and forecasting future periods. The non-GAAP information is presented using consistent methodology from quarter-to-quarter and year-to-year. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results.

(a) Share-based compensation expense in accordance with FAS 123 (R), management incentive program associated with the Snap Appliance acquisition (acquired in July 2004) and deferred compensation expense related to assumed stock options associated with the Snap Appliance acquisition. These assumed options were negotiated as part of the acquisition and represent compensation over and above the amounts that we provided to these acquired employees. Amounts are summarized below:

                           Three-    Three-    Nine-     Nine-     Three-
                           month     month     month     month     month
                           ended     ended     ended     ended     ended
                          December  December  December  December  September
(in millions)             31, 2006  31, 2005  31, 2006  31, 2005  30, 2006
--------------------      --------  --------  --------  --------  --------
Stock-based compensation
 expense                  $    2.2  $     --  $    6.8  $     --  $    2.0
Management incentive
 program                        --       0.8       0.8       3.4       0.2
Deferred compensation
 expense                        --       0.1        --       1.1        --
                          --------  --------  --------  --------  --------
    Total                 $    2.2  $    0.9  $    7.6  $    4.5  $    2.2
                          ========  ========  ========  ========  ========
(b) Amortization of acquisition-related intangible assets, primarily core and existing technologies, patents, tradename and customer relationships intangible assets, related to the acquisitions of Snap Appliance, the IBM i/p Series RAID business (acquired in June 2004), Elipsan (acquired in February 2004), ICP vortex (acquired in June 2003) and Eurologic (acquired in April 2003).

(c) Amortization of acquisition-related intangible assets, primarily core and existing technologies, patents, tradename and customer relationships intangible assets, related to the acquisitions of the IBM i/p Series RAID business, Elipsan, ICP vortex and Eurologic.

(d) Restructuring charges primarily related to (i) activities under the first and second quarters of fiscal 2007 and third quarter of fiscal 2006 restructuring plans to simplify our infrastructure and (ii) adjustments made to previous restructuring plans for all periods presented.

(e) Loss on the sale of our Singapore manufacturing assets, buildings and improvements and inventory.

(f) Incremental income taxes associated with certain non-GAAP adjustments and a tax benefit from certain discrete tax events during the second and third quarters of fiscal 2007 related to the method and amount of settled tax disputes.

(g) Incremental income taxes associated with certain non-GAAP adjustments.

(h) Income (loss) from disposal of the IBM i/p Series RAID business, net of taxes, impairment of the IBM i/p Series RAID long-lived assets, amortization of acquisition-related intangible assets related to the acquisitions of the IBM i/p Series RAID business, ICP vortex, Eurologic and Platys Communications, management incentive program and deferred compensation expense related to assumed stock options associated with the block-based portion of its systems business, and incremental income taxes associated with certain GAAP and non-GAAP adjustments. Amounts are summarized below:

                           Three-    Three-    Nine-     Nine-     Three-
                           month     month     month     month     month
                           ended     ended     ended     ended     ended
                          December  December  December  December  September
(in millions)             31, 2006  31, 2005  31, 2006  31, 2005  30, 2006
--------------------      --------  --------  --------  --------  --------
Impairment of the IBM
 i/p Series RAID Business $     --  $     --  $     --  $   15.5  $     --
Acquisition-related
 intangible assets              --        --        --       3.2        --
Management incentive
 program                        --       0.2        --       1.0        --
Deferred compensation
 expense                        --        --        --       0.4        --
Loss (income) from
 disposal of IBM i/p
 Series RAID, net of
 taxes                        (1.3)     (3.5)     (5.0)      3.5      (2.4)
Income taxes                    --       0.3       0.0       0.0      (0.1)
                          --------  --------  --------  --------  --------
    Total                 $   (1.3) $   (3.0) $   (5.0) $   23.6  $   (2.5)
                          ========  ========  ========  ========  ========

(i) Dilutive effect of employee options and 3/4% convertible notes.

(j) Anti-dilutive effect of employee options.

(k) Amortization of acquisition-related intangible assets, primarily core and existing technologies, patents, tradename and customer relationships intangible assets, related to the acquisitions of Snap Appliance, the IBM i/p Series RAID business, Elipsan, ICP vortex, Eurologic and Platys Communications (acquired in August 2001).

(l) Impairment of goodwill.

(m) Impairment of acquisition-related intangible assets of $13.2 million, which included core and existing technology and tradename, related to the Snap Appliance acquisition and $0.7 million related to legal and consulting fees incurred in connection with the effort that had been undertaken to sell the Snap Server portion of the systems business.

(n) Loss on repurchases of 3% convertible notes.

(o) Dilutive effect of 3% convertible notes.



                                 Adaptec, Inc.
                    Summary Balance Sheet and Cash Flow Data
                                  (unaudited)


                                                     As of
                                        ----------------------------------
                                         December     March      December
Balance Sheet Data                       31, 2006    31, 2006    31, 2005
---------------------                   ----------  ----------  ----------
                                                  (in thousands)

Cash, cash equivalents and marketable
 securities                             $  572,488  $  556,552  $  532,306
Accounts receivable, net                    35,318      47,876      57,086
Inventories                                 30,634      28,259      26,215
Other intangible assets                     10,059      32,524      45,816
Other assets                                84,871      72,188      84,805
Assets from discontinued operations             --          --       2,140
                                        ----------  ----------  ----------
     Total assets                       $  733,370  $  737,399  $  748,368
                                        ==========  ==========  ==========

Current liabilities                     $   84,699  $  138,605  $  140,379
Convertible notes and other long-term
 obligations                               227,990     229,349     240,648
Stockholders' equity                       420,681     369,445     367,341
                                        ----------  ----------  ----------
     Total liabilities and
      stockholders' equity              $  733,370  $  737,399  $  748,368
                                        ==========  ==========  ==========


                                            Three-Month Period Ended
                                        ----------------------------------
                                         December    September   December
Cash Flow Data                           31, 2006    30, 2006    31, 2005
---------------------                   ----------  ----------  ----------
                                                  (in thousands)

Net income (loss)                       $    6,378  $   51,065  $   (3,261)
Less: Income from discontinued
 operations                                  1,301       2,308       2,837
                                        ----------  ----------  ----------
Income (loss) from continuing operations     5,077      48,757      (6,098)
Adjustments to reconcile income (loss)
 from continuing operations to net cash
 provided by (used for) operations:
  Non-cash P&L items:
    Loss on sale of long-lived assets           --          --       1,472
    Non-cash effect of tax settlement      (12,877)    (45,955)         --
    Stock-based compensation                 2,240       2,023         223
    Depreciation and amortization            3,957       4,286       6,340
    Inventory-related charges                7,788       1,894       2,276
    Other items                                (33)        237         507
  Changes in assets and liabilities          5,728     (16,313)     11,600
                                        ----------  ----------  ----------
Net cash provided by (used for)
 operating activities of continuing
 operations                                 11,880      (5,071)     16,320
Net cash provided by operating
 activities of discontinued operations       1,897       1,010       3,427
                                        ----------  ----------  ----------
Net cash provided by (used for)
 operating activities                   $   13,777  $   (4,061) $   19,747
                                        ==========  ==========  ==========

Other significant cash flow activities:
     Proceeds from issuance of common
      stock                                  1,304       2,704         775
     Proceeds from sale of business             --          --      24,126
The amounts for all periods presented reflect the reclassification of our Snap Server systems business from discontinued operations to continuing operations.



                                 Adaptec, Inc.
          GAAP Condensed Consolidated Statements of Operations and
          Reconciliation of GAAP to Non-GAAP Operating Results (*)
                                  (unaudited)


                                           Three-Month Period Ended
                                              September 30, 2006
                                          ---------------------------
                                       GAAP     Adjustments      Non-GAAP
                                     ---------  -----------      ---------
                                   (in thousands, except per share amounts)

Net revenues                         $  73,553  $        --      $  73,553
Cost of revenues                        47,010         (186)(a)     46,824
                                     ---------  -----------      ---------
Gross profit                            26,543          186         26,729
                                     ---------  -----------      ---------
Operating expenses:
   Research and development             13,560         (925)(a)     12,635
   Selling, marketing and
    administrative                      15,693       (1,099)(a)     14,594
   Amortization of acquisition-
    related intangible assets            1,470       (1,470)(b)         --
   Restructuring charges                 1,085       (1,085)(d)         --
                                     ---------  -----------      ---------
      Total operating expenses          31,808       (4,579)        27,229
                                     ---------  -----------      ---------
Loss from continuing operations         (5,265)       4,765           (500)
Interest and other income                5,825           --          5,825
Interest expense                          (883)          --           (883)
                                     ---------  -----------      ---------
Income (loss) from continuing
 operations before income taxes           (323)       4,765          4,442
Benefit from income taxes              (49,080)      48,297 (f)       (783)
                                     ---------  -----------      ---------
Income from continuing operations       48,757      (43,532)         5,225
                                     ---------  -----------      ---------
Discontinued operations:
   Loss from discontinued operations,
    net of taxes                          (132)         (49)(h)       (181)
   Income from disposal of
    discontinued operations, net of
    taxes                                2,440       (2,440)(h)         --
                                     ---------  -----------      ---------
Income (loss) from discontinued
 operations                              2,308       (2,489)          (181)
                                     ---------  -----------      ---------
Net income                           $  51,065  $   (46,021)     $   5,044
                                     =========  ===========      =========

Income (loss) per common share:
    Basic
      Continuing operations          $    0.42                   $    0.04
      Discontinued operations        $    0.02                   $   (0.00)
      Net income                     $    0.44                   $    0.04
    Diluted
      Continuing operations          $    0.36                   $    0.04
      Discontinued operations        $    0.02                   $   (0.00)
      Net income                     $    0.38                   $    0.04

Shares used in computing income
 (loss) per share:
    Basic                              116,325           --        116,325
    Diluted                            136,735         (695)(o)    136,040
The amounts for all periods presented reflect the reclassification of our Snap Server systems business from discontinued operations to continuing operations.